There is a massive disconnect between what business executives day and do when it comes to creating and managing the customer experience.

While 80% of executives say they want to use customer experience management (CXM) as a form of differentiation in 2010, only 11% would call their CXM approach “very disciplined”.

For example, most companies (44%) acknowledge that high-profile negative customer experiences have at some time compromised their brand, yet only 29% have high ability to handle and resolve customer complaints.

It is not that they don’t get it. On the contrary, experienced CEOs universally get the importance and the need for optimising customer experience. All the CEOs/ GMs/ MDs I know/ have met understand and appreciate the importance of creating and managing the customer value chain. (Over a lifetime that is a significant sample across 3 continents.)

The reasons for not doing anything about it are:

Reason #1: The view from the executive suite is somewhat distorted.

Only 12% of customers judge specific leading suppliers as extremely customer-centric (CMO Council Customer Affinity study), while 56% of those same suppliers think of themselves as extremely customer-centric.

That is, executives THINK they are doing something about but the customers don’t agree.

Reason #2: In the absence of a viable action plan, they persevere with status quo.

The only viable action for executives is maintaining the operational status quo (and maybe seeking small, incremental improvements) – because CXM vendors fail to put forward a convincing case. These vendors:

• Rely on hype
• Keep telling anecdotes about Disney
• Rarely address the risk factors
• Lack operational experien

The reasons conjured up above are a matter of opinion. I would really like to elicit YOUR view on this question. Instead of comments, please write your opinion HERE – and I will consolidate and give feedback next week with the result. (Thank you.)

In conclusion:

The big picture questions for all executives (that you should resolve in your organisation are:

• Are these two reasons mentioned above legitimate reasons NOT to make the creation and delivery of your customer value proposition the major priority?
• If these reasons do NOT apply to you, are you being honest with yourself and your stakeholders about the strategic business priorities?

Dennis

PS: Most statistics quoted are from publications sourced from Clear Action consultancy based in the US, but I believe they are relatively universal.

PPS: Please remember the 1-question quiz.

As part of this process we are going to to intorduce some changes – but it is too early to talk about those.

In the meantime, we are following a process of innovation – applying ‘design thinking’ to our organisation (a service business) the same as brand creators (say Apple) would do for physical products.

This video links back to the source article that informs some of our intellectual property development. (Astute readers may start picking up where we are heading to, but that is OK

The video expores 4 different types ‘learners’ or participants to the innovation process. As a smaller organisation, the same people must play different roles (not easy given natural preferences) but it helps being conscious of the stages and the various requirements.

Enjoy…

We thought it is interesting

Innovation as a Learning Process from Roger Shealy on Vimeo.

Here is the deal:

We have been trying to get our start-up going for almost 2 years now.

We have:

• The plans
• The prototype (wireframe)
• The passion

We lack the connections to source the funds to progress development. Realistically, the next stage is going to require a few million to throw the engineers, coders and designers at it – while the opportunity is still there.

The application we propose to develop will transform the retail supply chain.

It is a B2B application that has the potential to be bigger than Facebook, Amazon and Apple put together – although competitors will jump in before that happens, but you get the idea.

We have exhausted our own capital resources to get to this point.

By publishing this post/request, you can appreciate that it is an absolute long-shot, last resort attempt to get this up.

If nothing happens in the next 30 days, it is all over.

All it takes is one phone call, one 5-min conversation to change history.

Call (Aus 0411 030 436) or email myself OR email Joe.

Who knows what happens next?

Customer Experience is NOT what you think

There are three compelling reasons why (bricks & mortar) retailers should conquer the science and the art of delivering customer experiences.

ONE: Declining manufacturing as a % of GDP.

Even in Australia there has been the increasing reliance on services. According to Wikipedia, the 2010 estimates are as follows:

•           AU GDP by sector: agriculture (4%); industry (24.8%); services (71.2%)

TWO: Consumers will pay more for experiences than they will pay for stuff.

In 1970 spend on services exceeded spend on products for the first time – and in 2009 we spent 2x on services: (66%) of retail spend in the US is on services:

DIY has become DIFM (Do IT For Me).

The challenge you face is to add a service dimension to whatever you sell (product or service.

THREE: Delivering an experience is the single most important, sustainable differentiator.

Web-designers spend a lot of time on (UXD – user experience design) because they understand that if you lose the browser for a split-second it they are gone with a single click. Retailers have the opportunity and the ability to create an experience that counts (CXD) – but few do.

What is a ‘customer experience’?

• It is NOT customer service.

A clean store, friendly and helpful staff and user-friendly return policies – for example – is customer service not customer experience.

The great unspoken assumption is that you have the base right: great products or services at the right price, presented well and great customer service that meets expectations. Customer service is not longer a differentiator, it is cost of entry.

• It is NOT shoppertainment.

It is not singing and dancing, it is not plasma screens and things that fall out of the roof – that is shoppertainment, not customer experience.

Customer experience comprises all of the above, but above all customer experience has an emotional dimension.

How do you create the emotional connections?

This is of course quite complicated because human being are complicated – and their emotions especially so.

My favourite new consumer is NewNowLo and she is not Chinese: She is the person that moved from wanting new à demanding new, now at low prices.

The world is changing and people are moving from:

• Needing stuff >>> Demanding experiences
• Conformity >>> Customisation
• Plutocracy >>> Democracy
• Self >>> Community

Consider just two emotions and a few retailers that do a reasonably good job of delivering that emotional connection.

AROUSAL OF THE SENSES

• Abercrombie & Fitch
• Victoria’s Secret
• Starbucks

EXCITEMENT/TENSION FROM NOVELTY

• Zara
• Daily Deals
• Anthropologie

Delivering the customer experience is reliant on the H-Factor. That was the basis of the talk I delivered recently at the Melbourne Retail Expo and Conference.

I have publised the latest newsletter (ReadThinkLearnLaugh). SUBSCRIBE HERE and receive access to the latest issue which contains a series of screencasts exploring how you create and deliver a customer experience. (HINT: customer experience is NOT customer service.) I have based on the presentation menioned above – and there is a special offer for readers 

In truth, this is nothing to worry about – it is the cycle of life (and death) as we have known it for aeons. Whether it is a football team, a tree or a country – the cycle of life applies to everything and retail is no different.

This process can be illustrated by the typical lifecycle curve as per figure 1.

The emergence of the abovementioned trends has no doubt shortened a few lifecycles.

Strategy textbooks teach us that the traditional and ideal response would be for a business to use the strong cashflows from the mature stage to invest into growth categories/products or markets.

In this case, the business ‘jumps’ the curve. Figure 2 illustrates the process. The truth is that few businesses actually repeat this process repeatedly. (How many businesses can you think of that have reinvented themselves over many decades – compared to the number that have gone bust?

There is a third and scarier curve that we face: the cycle of death.(Figure 3.)

I indicate that there is a disruption that destroys the curve (and it can happen at any stage of the life cycle – not only at the end of the curve.)

And a changing climate is such a (potential) disruption.

We were doing some work in Caloundra on the Sunshine Coast recently (nice work if you can get it, I know) and upon arrival at the airport we were informed of the “Ash Cloud.”

We ended up driving back to our hometown some 1200km and 14 hours away. And besides the inconvenience of having to arrange emergency accommodation for our 13yo, the effect was minimal.

You would argue that the economic effect was possibly even a net gain as people suddenly paid extra for accommodation, travel, cabs, meals etc.

But if you consider that cloud to be just one example of the adverse economic effect  of climate change and let’s imagine if that cloud hung around – permanently.

Let’s play a little what-if game here and maybe you can help me identify all the business that would go broke of Qantas stopped flying:

E.g. What would happen…

-        at Qantas?

-        The little coffee shop?

-        the cabbie?

-        The owner of the surrounding convention centres and hotels?

-        The suppliers to all of the above.

Earthquakes and ash-clouds and dying oceans will not respect the country borders.

Globalisation created an interconnected world in an attempt to lower the costs – and now it seems it was a zero sum game because all those costs we saved are now coming back to haunt us.

Here are a few thoughts from Paul Gildings (researcher and author): “The Earth is full”. Think about that for a moment.

It is easy to quote many scary statistics, but the truth is that it is almost as easy to quote the opposite. Most people cannot predict what they will have for breakfast, never mind the state of the ecology in 30 years’ time.

But let’s consider just a few facts that are relatively clear”

Based on current trajectories all fisheries in the world will collapse in 2048 – (30% already have.). You may be able to imagine a world without fish, but about 1Bn primarily live of fish. I don’t know whether you have thought about how these people, mostly from under-developed countries, but also including countries like Japan, are going to react when the disaster becomes obvious and imminent?

We are facing a Mad Max kinda future. A recent study has identified 9 planetary boundaries (climate, biodiversity, nitrogen levels etc.) which are critical to our long-term survival. The study found that 3 of those boundaries are already past the tipping point – i.e. beyond the point of no return.

You cannot separate the Ecology from the Economy. The US Senator Gaylord Nelson remarked that: “The Economy is a wholly-owned subsidiary of the Environment, not the other way around.”

Here is a picture to that will clear your sinuses:

Imagine the Earth is a pool of Capital. It is finite of course. We cannot make more ‘planet’ even if we wanted to and no matter what you smoke, that won’t change.

Human beings live off the interest that this source of capital generates: that is our sole source of income.

We are currently living at 140% of our capacity. If we take 2008 as our base year, that means that come 25 September 2009, we have spent all our money.

We then proceed to draw from our capital until the end of the year – when the next batch of interest becomes available.

• What happens in 2010?
• And what happens to the total amount of interest we had available?
• What happens in 2011?

Change is sudden and non-linear. Until the day before you run out of money – everything will still seem OK. That is why it is so hard for people to see what is happening.

With Population Growth at 0.8% and GDP Growth at 2.5% and Efficiency Improvements at 1.2 % (all current numbers) – it takes us to a Planet at 500% of capacity by 2050 (and 2x capacity in 2030.)

Does that scare you?

Don’t worry; it won’t happen because it can’t physically happen.

A dam can be 100% full or even 120% full, but it can’t be 200% full because then there is no dam. As Australians we should, tragically, be able to relate to that.

This is Australia, so you won’t be offended if I talk about our BIG CONSUMPTION HANGOVER – the cause of which is pretty evident, particularly in the developed countries:

• In the US the Average CEO wage is 500x the minimum wage.
• A Hummer is bigger than 2 shacks in Soweto that would house maybe a dozen people.

I am not a climate change advocate. In fact, I probably lean more towards the sceptical side if you want to know. But as you will see shortly, it does not actually matter which way you lean, there is a massive disruption on the way.

Human beings are very good at filtering out information that does not fit neatly into our vision of the world. “We can’t cope otherwise,” says James Glieck, author of books about chaos theory.

I try to resist that. I understand, and so should you that: everything is just probability. There is no certainty. I cannot predict the future. Scientists cannot predict how much it will rain while it is raining, never mind the likelihood or impact of Climate Change.

What scares me most is that if it is not climate change that will cause the big disruption, then it is us trying to deal with it. I don’t purport to know all there is to know, but I am willing to lay very large bets that Carbon Tax is just the beginning.

Now, let’s talk some more about Facebook and Twitter.

Or we could talk about whether your business is built to deal with real disruption.

1. If you have to ask to be followed, then you are not much of a leader.
2. If you have to be asked to be liked, you are not like-worthy.
3. If you are re-tweeted, then it is not cool to re-tweet that under the guise of saying thank you when all you really want to do is re-tweet yourself.
4. It is OK to tweet your blog posts – even a few times. Just don’t automate it ad nauseum.
5. It is NOT cool to cross-update everything every time on every platform.
6. It is really much better if you actually explore the links BEFORE your re-tweet them, otherwise it is obvious that you are just sucking up.
7. If you can’t see the difference between Twitter and LinkedIn and Foursquare and you want everyone one to follow you and every platform imaginable, then you can’t really advise anyone else on the ‘strategic’ use of said platforms, right?
8. It is not cool to NOT follow people back. You might want to act like a celebrity but you are probably not really one. (And claiming that you have talked to Kim Kardashian doesn’t count.)
9. It is OK to ignore the bots and companies of no relevance just out there drumming up business.)
10. It is proper to say thank you when your posts are picked up in a Paper.Li issue – but a bit ‘try-hard’ if is just a tweet being re-streamed.
11. Just because there is no filter between your brain and your keyboard, does not mean there shouldn’t be one: if you wouldn’t say it face-to-face, then don’t say it.
12. It is super-uncool to post/tweet about a trending topic and add nothing more than an opinion, especially when it is a topic you know nothing about – like someone who died or had an affair.

Anxiety, Bifurcation, Contagion, Debt, Euro, Frugal, Greece, Hope, Inflation, Juvenoia, Kaput, Locavore, Marginal, Nostalgia, Ostalgia, Payoff, Quality, Regulation, Simplicity, Thrift, Unemployment, Volatile, Weisure, Xenophobia, Yearning, Zen mail.

I suppose one can study these words, some of them a bit wanky if you ask me, but are important indicators nevertheless.

Understanding and agreeing/disagreeing with these trends is one possible response.

But for me the more important and more interesting question is whether your business has a mechanism in place to:

1. Monitor/ identify the trends (collect the info)
2. Consider the possible trends
3. Respond to the trends and evaluate your response

Some of these trends will continue – and may have an impact on how we do business. Other trends will fizzle away.

The actual trend is not that important. What is important is whether you are equipped to spot it – and deal with it.

So, how are you dealing with the future?

Dennis

PS: Just back from my sojourn to NZ. I will now figure out how to best share the presentation & content with y’all. Stay tuned by subscribing to the newsletter for access – however that will be arranged.

PPS: And happy birthday to LAURAINE. 

Not quite ready to start posting, but got a lovely email this morning:

I greatly appreciate your support and I hope to have your involvement in Retail 2012 (which conveniently will be in Sydney 24-26 Sept).

 There was some fantastic feedback regarding your presentation from delegates on the online survey and I have copied their comments for you below – congratulations.

• Great
• Awesome.
• Good
• Enthusiasm, very endearing
• Clear and concise

I look forward to working with you again.

Whilst only 5 people specifically commented, and it is probably a biased sample, I thought that in the absence of anything worthwhile to say, I will just take that and share it in an act of unashamed self-promotion.

But there is a ‘lesson’ in all of this. 

The presentation at Melbourne Retail Expo and Conference 2011 came about because someone found my blog, hooked up via twitter (and vice versa) and eventually ended up recommending me to the conference organisers.

From this conference further enquiries have already flowed, so it just goes to show the exponential power of using social media.

Dennis

PS: Of course credit is due to Moonyeen for helping to make a good presentation great. And that is another lesson. Don’t be too proud to take advice and don’t think you know it all.